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Sunday, March 02, 2014

China's Geely buys U.K. electric-car startup

SHANGHAI--Chinese auto maker Zhejiang Geely Holding Group Co. said it has acquired British electric-vehicle startup Emerald Automotive for an undisclosed sum.

Emerald Automotive CEO Andy Tempest.

Victor Yang, a spokesman for Geely, said Saturday the purpose of the acquisition was to help the company boost its ability to generate "next generation" taxis, including electric taxis.

The deal was signed Friday in London.

In February 2013, Geely acquired the principal assets of Manganese Bronze Holdings PLC--owner of the London Taxi Co., which manufactures the city's black cab--for around $18.5 million.

Geely bought Sweden's Volvo Car Corp. in 2010.

While the investment amount for the Emerald deal wasn't revealed, a statement from Emerald said Geely had committed to investing a minimum of $200 million over the next five years to develop Emerald's range of electric vehicles.

Emerald currently has developed prototypes of two models of electric delivery vans, which the company has plans to build at a plant in Hazelwood, Mo.

With the acquisition of Emerald, Geely agreed to "maintain its loan" commitments, including those pertaining to a proposed plant, Geely's Mr. Yang said.

Gary Marble, a spokesman for Emerald, put that amount at around $5 million for loans previously secured from the state of Missouri and the city of Hazelwood.

Mr. Yang played down the idea that Geely would build vehicles in the U.S. immediately, but suggested it might be a possibility in the "very long term."

In a statement, Andy Tempest, Emerald Automotive's chief executive, said: "This is a fantastic opportunity which will allow us to expand our current vehicle development work in line with Geely Group's global vision." He added that the deal would secure Emerald's long-term future.

Mr. Yang said Geely had plans to develop new energy vehicles for London Taxi first and would look to targeting taxi fleets in other markets in the future, including China.

"As people want a better standard of living, they demand better service, " he said, adding that in China, taxis were still in the early stages of development. "We need better cars and better taxi services," Mr. Yang said.

China's government wants 500,000 hybrid and electric vehicles on its roads by next year and five million by 2020. The rate at which the market has adopted them, however, has been slow. In 2013, only 17,600 such vehicles were purchased in China, including hybrid and pure-electric cars and buses. It is likely that the current total number of vehicles is no more than 50,000.

China's local authorities are planning to speed up the construction of charging stations for electric cars in urban regions, Xinhua reported Saturday. Beijing said it would add 1,000 electric chargers by the end of this year, according to the report.

As central and local governments in China come under increased pressure to reduce air pollution and ease traffic congestion, more are looking to expand the use of new energy vehicles in public transportation, including taxi fleets.

Companies such as car maker BYD Co., which is considered a pioneer in the country's electric car industry, have been increasingly looking to public bus and taxi fleets as an important markets for building demand for electric vehicles, in China and overseas. BYD's electric cars form part of the taxi fleet in the southern Chinese city of Shenzhen. The company also has a small-scale manufacturing plant in Lancaster, Calif., that produces electric buses.

Corrections & Amplifications Zhejiang Geely Holding Group Co. acquired the principal assets of Emerald Automotive in February 2013. An earlier version of thie story incorrectly said the deal was completed in February 2012.